Notice to Consumer Proposal Clients

NOTICE TO CONSUMER PROPOSAL CLIENTS:

 

Dear Valued Clients:

 

Due to the recent series of events regarding COVID 19, we understand that several of you are feeling anxious, stressed and uncertain about the status of your Consumer Proposals and your ability to continue. Some of you may be in a position to maintain payments for the time being however we know that everyone’s circumstances are different and unfortunately there will be some cases where payments are unsustainable for the foreseeable future.

 

We want to assure our clients that BNA is doing everything possible to determine the federal government’s position regarding payments that are coming due. We have communicated our concerns with the local Office of the Superintendent of Bankruptcy (OSB) here in Alberta and we have escalated our concerns to their head office in Ottawa as have other Trustees in the industry. In addition, we understand that our professional association, likewise, has been communicating with the Superintendent in Ottawa as this is a national issue. We understand that this matter is receiving priority in Ottawa and although we do not have a formal response, we are anticipating receiving some formal direction shortly.

 

Until such direction is received, we want to provide you all with some information in regard to your options going forward, however please keep in mind the legislation surrounding Consumer Proposals remains unchanged at this time so we have listed those specifics below for your consideration as well:

 

  • Consumer Proposals must be completed within 5 years or 60 months, unless a shorter time frame was agreed upon in your specific proposal terms. We have not received any communication that extensions will be allowed.

 

  • There is a 3 payment clause in Consumer Proposals wherein as soon as you are 3 payments in arrears, your proposal is automatically annulled and creditors rights are reinstated.

 

  1. If within 30 days of annulment, you are able to pay the arrears balance in full, we can “Automatically Revive” your proposal, pending no objections are received from your creditors.

 

  1. If you are unable to pay the arrears within 30 days, but perhaps it will take you several months, we are able to make a Court Application for an Order to Reinstate your proposal at such time all arrears have been paid up to date. The Court is concerned about creditors being prejudiced with such applications and ultimately it is up to the Court whether they grant such applications or not.
  • If you believe that your income is secure and stable, please continue to make your payments as required until such time that changes.

 

  • If you are up to date on your payments and you believe your income will drop over the next few months, but anticipate it going back to normal in due course, please pay what you can towards your proposal to keep it in good standing for the time being. You can always increase your monthly payments once your income has stabilized again to get back on track to complete your payments as required within the legislated 60-month timeframe.

 

  • If you are close to annulling (2+ payments behind), you may wish to amend your proposal. This will restart the 45-day voting period for creditors to consider your amended proposal. If the creditors do not approve your amendment, you do NOT go back to the original proposal but instead creditors rights are reinstated, and you are left with no protection from their ability to collect from you. Because of this risk, the amendment needs to be done with good reason and a reasonable offer made. We will need to review your circumstances case by case to determine what a reasonable offer looks like, as your amended offer still needs to give creditors a better recovery in comparison to what they would receive in a bankruptcy scenario. Please note, we CANNOT amend once you have already annulled.

 

  • If you feel that your proposal is not sustainable under any circumstances, or you have already annulled, we can discuss what a bankruptcy would look like for you and you can decide from there how best to proceed.

 

  • If you end up needing to file for bankruptcy in the interim to continue to have protection from your creditors, if your situation improves down the road you do not need to remain in bankruptcy. We have the option to “flip” you out of the bankruptcy to file another Consumer Proposal, with the Court’s approval. If the creditors accept the second Consumer Proposal, this annuls the bankruptcy and eliminates it from your credit history. If the creditors do not accept it, then you would remain in the bankruptcy.

 

If you wish to discuss the specifics of your situation, please feel free to contact our office via telephone or email for further information and assistance. Please note that several of our staff are working remotely and we only have limited staff in the office to help answer phone calls. If you are unable to get through to somebody, please leave a message and we will call you back at our earliest convenience. We ask that you are patient with us as we have thousands of clients and we are doing our best to respond to each and everyone of you with limited staff and resources.

 

Thank you all for choosing BNA Debt Solutions. Rest assured you that we will work together to find the best solution for your specific situation in these ever-changing circumstances.

 

UPDATE:

As promised in our last communication, we have now received some broad guidance from the Office of the Superintendent of Bankruptcy (OSB) that we would like to pass along.

 

The below is an excerpt directly from an email from the Superintendent of Bankruptcy in regard to COVID guidance:

 

Licensed Insolvency Trustees (“LITs”) “are encouraged to exercise their professional judgment in using as much flexibility as possible to avoid unintended harm or prejudice in the current circumstances. Section 187 of the Bankruptcy and Insolvency Act (BIA) could be considered as appropriate (in particular subsections 187 (9), (11) and (12) with the caveat that some sections of the BIA, such as subsection 50.4(10), may override this provision). LITs are expected to document their policies, procedures and rationales during this period. The OSB’s approach to compliance will also be flexible and practical in light of the situation.”

 

Some of our proposal clients are asking if we will be offering proposal “relief”. The answer is officially “no” from the Superintendent of Bankruptcy, but they are allowing us some flexibility as stated above. The above-mentioned “harm or prejudice” applies to both the debtor and the creditors, so each file will be looked at on a case by case basis to ensure no party is prejudiced by our decision. We shall review each file on its individual merits in determining what flexibility can be afforded in each circumstance.

 

We would also like to inform you that at this time we have decided to keep our doors closed to the public until further notice. We will continue to operate behind closed doors and you can always reach us via telephone and email.

 

If you wish to discuss the specifics of your situation, please feel free to contact our office via telephone or email to proposals@bnadebtsolutions.ca and we will review your file and get back to you with our position. Please note that several of our staff are working remotely and we only have limited staff in the office to help answer phone calls. If you are unable to get through to somebody, please leave a message and we will call you back at our earliest opportunity. We ask that you are patient with us as we have thousands of clients and we are doing our best to respond to each and everyone of you with limited staff and resources.

 

Thank you all for choosing BNA Debt Solutions. Rest assured you that we will work together to find the best solution for your specific situation in these ever-changing circumstances.